An investment mix that changes over time

The investments in a target date fund change over time based on the target retirement date. This gradual shift is called a “glide path."

Our objective-based glide path

This objective-based glide path shows what growth funds in the form of stocks, growth-and-income funds in the form of stock, equity-income and balanced funds in the form of stocks and bonds, and fixed-income funds in the form of bonds could look like over a period of 40 years before retirement, during retirement, and 30 years past retirement.  Initially, 40 years before retirement, the majority investments in growth funds and growth-and-income funds are declining over time, with a sharp drop around 20 years before retirement and again around 15 years before retirement.  Growth funds taper off shortly after retirement, while growth-and-income funds decrease significantly, but sustain at a much lower rate through retirement years.  Equity income and balanced funds start out smaller in the first 25 years of investment, starting to increase slightly for about 10 years before declining again until the point of retirement. The fund starts to increase again slightly after the point of retirement.  Fixed income has less impact in the first 30 years, but increases significantly through retirement and post-retirement. The chart also shows a point common to all the funds at the point around 20 years before retirement to show the fund’s current investment mix.

The target allocations shown are as of January 1, 2019, and are subject to the Portfolio Oversight Committee's discretion. The funds’ investment adviser anticipates that the funds will invest their assets within a range that deviates no more than 10% above or below these allocations. Underlying funds may be added or removed during the year. Changes in the equity allocation within the underlying equity-income and balanced funds may affect the overall equity exposure in the target date funds. For quarterly updates of fund allocations, visit

How a target date fund works:

  1. Significant stock investments throughout the lifetime of your fund can help manage the risk of outliving your savings in retirement.
  2. An increased emphasis on bonds as you near your retirement date can help manage the risk of market declines.
  3. A fund may continue to be managed beyond retirement, so you could feasibly use that target date fund for decades.

The benefit of saving for retirement

Target date funds make it easy to start saving for retirement. Of course, the longer you have to invest, the better your potential to realize your retirement goals.

See how contributions to your plan could add up over time:

This bar chart compares how contributions to your plan could add up over time, comparing contribution amounts made every two weeks to your plan value in 10 years, 20 years, and 30 years.  If you contribute $50 every 2 weeks, the value would be $19,932 in 10 years, $64,236 in 20 years, and $162,717 in 30 years.  If you contribute $150 every 2 weeks, the value would be $59.795 in 10 years, $192,709 in 20 years, and $488,151 in 30 years.  If you contribute $300 every 2 weeks, the value would be $119,591 in 10 years, $385,418 in 20 years, and $976,302 in 30 years.

* This hypothetical example is for illustrative purposes only and does not reflect the results of any particular investment, which will fluctuate with market conditions. An 8% average annual return rate, compounded every two weeks, is assumed. Withdrawals before age 59 1/2 may be subject to income taxes and, if applicable, to a 10% federal penalty tax.

 For fund results or for information about your retirement plan, talk with your plan provider or employer, or visit your plan’s website.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

Important information about objectives, risks, charges and expenses for collective investment trusts is contained in the Characteristics Statement, which can be obtained from Capital Group or participants' plan provider or employer.

Although the target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met. Investment professionals manage the portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the target date gets closer. The target date is the year that corresponds roughly to the year in which an investor is assumed to retire and begin taking withdrawals. Investment professionals continue to manage each portfolio for approximately 30 years after it reaches its target date.

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Collective Investment Trusts (CITs) are available for investment only to certain qualified retirement plans. Capital Group CITs are maintained by Capital Bank and Trust Company (“trustee”), which has retained an affiliate to serve as investment adviser to the trustee.

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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.